32 companies charging the Super Grid now

Nov 17, 2010 - Ciara Bryne - Venture
Beat

The super grid, the theme of VentureBeat’s
next GreenBeat conference, involves a bewildering
array of technologies and companies from industry
behemoths like GE and Cisco to disruptive young startups.
Together, they’re taking existing efforts to
build a smart power grid to the next level. With
billions of dollars of untapped potential in the
profitable collision of information technology, energy,
and cleantech, it’s no wonder so many pioneers
are staking out territory.

In this article, we cover the major fields of super-grid
opportunity and the companies, large and small, playing
in them. It’s not an exhaustive list, but rather
a guide to the companies we believe are currently
best positioned to charge up the super grid.

Power generation
One of the biggest challenges for the super grid
is integrating sources of renewable energy like
wind and solar power. The current electricity grid
is most efficient when the power is being consumed
at the same time that it is generated and when
supply and demand are steady. With renewables,
supply peaks unevenly since energy is not generated
at a constant rate or at all times of the day.

Many small local sources of energy like homeowners
selling back energy to the grid may also become available.
A connected collection of these sources is called
a microgrid and can be managed like a virtual power
station.

The market for software to integrate renewables
and microgrids with existing power generation seems
to be at an early stage. Gridpoint delivers a suite
of smart grid applications that aggregate and manage
distributed sources of load, generation and storage
including integration of renewables and electric
vehicles. Homer Energy provides modelling software
to analyze and optimize power grids that incorporate
high penetrations of renewable energy sources. Balance
Energy produces microgrid and renewable generation
solutions which integrate and aggregate distributed
generation and storage resources.

There is a glut of new companies making solar microinverters
and the software to manage them. A microinverter
improves the efficiency of a solar array by allowing
individual panels to operate independently. Normally
panels are connected in a series and are only as
strong as their weakest link, i.e. a panel which
is shaded or soiled. Contenders include Enphase,
Abound, PVPowered and Satcon. Some vendors like Satcon
also makes solar energy management solutions for
solar power plants. Satcon’s system breaks
a large solar array into small strings of well matched
modules in order to optimize the performance of the
entire array.

Power storage
Energy storage is expensive so utilities tend to
keep power stations running on low output, a state
known as “spinning reserve,” so they
can be ramped up quickly to deal with peaks. This
is not very efficient and not possible at all with
renewables so several companies are tackling the
storage problem.

BeaconPower specialises in flywheel energy storage
which works by accelerating a flywheel to a very
high speed and maintaining the energy in the system
as rotational energy. The energy is converted back
by slowing down the flywheel. Stored energy is brought
online when demand peaks. A single flywheel can store
25 kilowatt-hours of electricity.

Distribution and substation automation
While smart meters — networked, computerized
energy meters which replace old analog devices — get
all the attention, equipment and software to manage
the distribution network itself could actually be
a bigger business opportunity. The Cleantech Group’s
smart-grid vendors report says that this market is
worth $1.4 billion in 2010. GTM Research’s
smart grid market forecast goes even further and
pins the 2010 market value at $2 billion rising to
$5.6 billion in 2015. In spite of this, only 7 percent
of venture capital dollars invested in smart-grid
startups have been in the distribution sector.

Power is transmitted along high-voltage power lines
from power stations to local distribution substations.
These substations then distribute to homes and businesses.
Smart-grid applications for distribution focus on
automating those substations to a great degree and
monitoring, fault detection and optimization of the
power lines distributing electricity. The Cleantech
Group estimates that only 56 percent of the more
than 100,000 US substations have any automation.
Utilities also need new distribution management systems
to process and manage all the new data being generated
by the distribution network.

The dominant companies in this market are legacy
grid vendors like ABB, GE and Schneider Electric.
Suppliers like Telvent specialize in particular areas
like substation automation. Communications giants
such as Siemens and Motorola provide the communications.
A few smaller companies have broken into the market.
Ruggedcom makes communications equipment like routers
and switches specifically adapted to harsh electrical
environments like substations. According to the Cleantech
Group’s report Ruggedcom owns 54 percent of
the substation routers and switching market.

Another interesting distribution company is Powersense.
Recently selected as one of CleanTech’s Group’s
global clean tech 100 list, the Copenhagen-based
company produces sensing technology for substations
and medium voltage distribution grids. For high voltage
transmission grids Gridsense sells overhead line
recorders which can monitor the condition of the
line.

Smart meters
Smart meters bring information technology to the
edge of the grid, recording electricity consumption
and communicating data back and forth to a local
utility. The Cleantech Group estimates the advanced
metering market at $1 billion in 2010 while GTM
Research optimistically forecasts $2.5 billion.

Any smart-meter rollout involves not just the meter
manufacturers but also communications companies,
meter data management systems and system integration.
The diagram above from Itron shows where all that
stimulus money is going and how it is divided between
the different suppliers. 50 percent of all VC dollars
going into the smart grid were invested in metering,
in particular communications companies.

Communications are needed between the meters, local
smart appliances and a concentrator which links the
home network (HAN) to a local or wide area network
to return the data to the utility. The HAN network
in the US is dominated by a low power wireless technology
called Zigbee. This isn’t true, worldwide,
however. China, which plans to deploy 150 million
meters by 2015, uses a powerline communications technology
as does most of Europe.

The meter world is dominated by a small number of
global companies such as Itron, Landis & Gyr,
Elster and GE. Itron alone accounts for 50 percent
of the smart meters installed in the US. They in
turn buy components from smartgrid chip vendors like
Accent and Teridian.

The communications software and chips are supplied
by people like Silver Spring Networks, Trilliant
and Smartsynch. Silver Spring networks in particular
has received a massive amount of VC investment ($247
million) and commands significant market share. On
the powerline side there are companies like Ambient
who create high-speed data communications networks
over medium and low voltage distribution lines.

Finally, utilities need new metering data management
systems to clean up and process the massive amount
of data generated by the meters. There are a few
pure play vendors in that area like Ecologic and
eMeter but the giants like Itron also supply their
own systems.

The smart meter can form one pillar of a home energy
system such as Google Power Meter, Microsoft Hohm
or Opower. Comprehensive home energy systems like
those supplied by Tendril add smart sensors, appliances
and plugs to the mix but are expensive and currently
at an early stage in terms of deployment.

Demand response
Some commentators maintain that demand response (DR)
is the killer super-grid application. Demand response
means reducing the demand on the grid when it exceeds
supply (see our coverage). By 2019, DR could be
capable of reducing peak usage by 20 percent.

The Cleantech Group’s smart grid vendors report
puts the demand-response market at $1 billion in
2010. Traditionally this is a services market where
a few major players like EnerNoc (which alone owns
25 percent of the market) and Comverge enforced DR
contracts with large commercial and industrial power
users.Now these vendors are also moving into residential
DR. Comverge is currently the leader in that area.

There are many different ways to implement demand
response. Utilities can directly shut down devices.
Customers can trade load reductions with utilities
as a sort of commodity on an energy marketplace.
It may be cheaper for a utility to “buy” large
reductions from customers rather than increase power
generation or storage. DR policies can be automated
and linked to real-time pricing so that, for example,
certain devices are shut down or slowed down when
the price exceeds a certain level.

Tendril and Gridpoint provide DR systems linked
to pricing. The increase in automation and complexity
of DR systems is also creating the need for a new
type of DR management system such as those supplied
by EnerNOC and Echelon.

Electric vehicles
Most smart-grid applications upgrade or optimize
existing grid elements and processes. Electric
vehicles (EVs), however, are a completely new addition — a
major reason why we need to move from the smart
grid to the super grid.

Take, for example, the Nissan Leaf, which has a
24-kilowatt-hour battery pack. The average American
household’s daily consumption of electricity
is 30 kWh. Electric vehicles will probably also “cluster,” meaning
people in certain geographies will buy them — as
early adopters set trends for their neighbors. Those
close concentrations of EVs will place a major strain
on the local grid.

It’s not all bad news. Managed correctly,
EVs could bolster the grid rather than just strain
it. Their batteries could be used by the utility
companies as a cheap alternative to other forms of
electricity storage. Researchers estimate that each
car could potentially provide up to $4,000 worth
of storage capacity per year.

Large volumes of EVs require battery monitoring
software and charging point systems as well as increasing
the need for many of the previously discussed technologies
like demand response. One of the leaders in this
space is Better Place which plans to not only supply
car batteries and charging points but also all the
software to manage them. Another big player is Coulomb
Technologies whose ChargePoint networked charging
stations provide myriad applications from tracking
charging point usage to billing and fleet management.
In both of these cases, the companies create software
for usage with their own products. Gridpoint supplies
more general-purpose smart charging solutions to
utilities.

That’s a brief introduction to just some of
the companies building the super grid, which will
look far more like the Internet than the energy-distribution
network of today: distributed, adaptable, and ever-changing.